Bolitics The New Condem Government

[ml1dch]

I'm sure that we can all appreciate the wit and good-humour involved.

I mean, who wouldn't be cheerfully amused by the current economic situation?

[drat01]

The Byrne letter is not exactly "news" now is it,?

[Gringo]

The review is expected to move over into the measurement of national debt, billions of pounds worth of public liabilities in Private Finance Initiative (PFI) and future public sector pension payments which the Tories in opposition accused Gordon Brown of keeping "off balance sheet" while in government.

PFI should be included in the debt figures as it was an accounting trick just designed to keep the numbers off the balance sheet. Pensions never have been and should, and only will so that the tories can use it as a big stick to screw the public sector out of their contractual entitlements.

I'm pretty sure (but you'll know better than me) that Labour legislated to make it illegal for private sector companies NOT to include future pension commitments within their debt, but exempted themselves (ie, the public sector). That being the case I'm not sure why it's wrong to actually bring both into line under the same rules now?

The purposes of company accounts are not equivalent to the published public debt figures - I know that in both cases, the pension is a liability to be borne by the publisher, but the public debt numbers are not the place for it.

If we are to look at figures in a historical perspective, we must try and keep a consistent basis for these measures. That's why no one trust unemployment figures - maggie made 300+ changes to the calculation and her red prodigies made another hundred more.

Labour fiddled the public debt figures by hiding the PFI, so that should be resolved by including the PFI numbers. But we shouldn't distort the numbers by adding in something that has never been included.

[Richard]

The Byrne letter is not exactly "funny" now is it,?

Fixed

[Gringo]

The Byrne letter is not exactly "funny" now is it,?

Fixed

Well I laughed. Not as funny as his coffee diktats, but nice to see there's still a little bit of human left in the machine.

[Awol]

The review is expected to move over into the measurement of national debt, billions of pounds worth of public liabilities in Private Finance Initiative (PFI) and future public sector pension payments which the Tories in opposition accused Gordon Brown of keeping "off balance sheet" while in government.

PFI should be included in the debt figures as it was an accounting trick just designed to keep the numbers off the balance sheet. Pensions never have been and should, and only will so that the tories can use it as a big stick to screw the public sector out of their contractual entitlements.

I'm pretty sure (but you'll know better than me) that Labour legislated to make it illegal for private sector companies NOT to include future pension commitments within their debt, but exempted themselves (ie, the public sector). That being the case I'm not sure why it's wrong to actually bring both into line under the same rules now?

The purposes of company accounts are not equivalent to the published public debt figures - I know that in both cases, the pension is a liability to be borne by the publisher, but the public debt numbers are not the place for it.

If we are to look at figures in a historical perspective, we must try and keep a consistent basis for these measures. That's why no one trust unemployment figures - maggie made 300+ changes to the calculation and her red prodigies made another hundred more.

Labour fiddled the public debt figures by hiding the PFI, so that should be resolved by including the PFI numbers. But we shouldn't distort the numbers by adding in something that has never been included.

Furry muff, so if we leave pensions aside and just include PFI then that should mean the previous mob's figures were only somewhere between 250-400 billion pounds out...

I think it's reached the point that we are so massively in debt that people have ceased to care how much it actually is in total, the numbers are just incomprehensible - or to me at least. Fixing it is going to hurt bad one way or another and when you look at the squabbling over whether or not to increase NI contributions by 6 billion it puts the whole thing in perspective. What's 6 billion against well over 1 trillion?!

Meanwhile, we appear to be in a race to the bottom of the currency barrel with the Germans/Euro.

Serious question Gringo, where is this all heading now (best guess)?

[Gringo]

Serious question Gringo, where is this all heading now (best guess)?

Devalue, Default or Don't bother.

Well it can't be fixed through tax rises and spending cuts.

Rough numbers

GDP - £1.5tn

Debt - £1.2tn

Tax - £400bn

Deficit - £150bn

therefore Spending c£550bn

So raise taxes by 10%, cut spending by 10% reduces the deficit to c£60bn; if the economy recovers and tax revuenues return to 2007 levels then the deficit would be close to zero.

That's the minimum required just to stop the debt getting bigger.

Red and Blue both aimed to cut the deficit in half over four years. So by 2014, debt would be up to £1.6tn and the interest alone £80bn per annum.

So we go back to the devalue or default options. Can't see any other way out.

[Awol]

So we go back to the devalue or default options. Can't see any other way out.

Ok, that's pretty much what I figured so let's explore those two options a bit.

Devalue: Try to remain attractive for export market but our biggest trading partner is doing the same thing (Euro) so no net gain there. Meanwhile inflation increases massively, cost of living, imports from outside of Eurozone etc goes through the roof and people's savings are dissolved. BUT, the debt gets smaller at the cost of just about everything else.

Default: Become an economic pariah internationally, the City (still a massive revenue generator for the Exchequer) is damaged - perhaps fatally - and no one anywhere will lend us a bean in future.

If you had to make the call which would it be and why?

I'm guessing default and be damned but but I'd like to here the logic for it

[Gringo]

So we go back to the devalue or default options. Can't see any other way out.

Ok, that's pretty much what I figured so let's explore those two options a bit.

Devalue: Try to remain attractive for export market but our biggest trading partner is doing the same thing (Euro) so no net gain there. Meanwhile inflation increases massively, cost of living, imports from outside of Eurozone etc goes through the roof and people's savings are dissolved. BUT, the debt gets smaller at the cost of just about everything else.

Default: Become an economic pariah internationally, the City (still a massive revenue generator for the Exchequer) is damaged - perhaps fatally - and no one anywhere will lend us a bean in future.

If you had to make the call which would it be and why?

I'm guessing default and be damned but but I'd like to here the logic for it

Managed Default, bit like a CVA. OK - debtors won't be happy but hey life's not without risks. Build up internal bond markets. Italian govt debts are mainly held by italian individual funds, ie your personal pension pot invests in govt gilts.

I don't think the harm to the city of london would be that bad - companies trade here because of the lax regulations and would continue to do so.

But of course a UK default would be followed by a greek default and a french default and the banks would be ruined. So we have to build new banks, one's that work.

I suppose there is a Tonystyle "third way".....

Total net worth of the UK, including financial assets, at the end of 2008 was £6,954 billion. This is a decrease of £177 billion on the previous year.

Detailed figures of the country’s wealth show that the most valuable asset continues to be housing with a total value of £3,923 billion.

A one off asset tax on net assets of 20% would pay off the debt in one go, and reduce the deficit from £150bn to £90bn.

[Ads]

I think it's reached the point that we are so massively in debt that people have ceased to care how much it actually is in total, the numbers are just incomprehensible

Just to give you something visual, if we go for a halfway house and say that we’re in just over a trillion pounds worth of debt, then it would be a little bit bigger than this.

[Awol]

Ads, I wish you hadn't done that.

I think we need the SAS to pull the mother of all bank jobs. Switzerland might be a good place to start.

[Richard]

You are not including a potential source of revenue which would be asset sale

[bickster]

You are not including a potential source of revenue which would be asset sale

nah do the opposite, renationalise and don't compensate

Take back the Utilities, take back British Rail extra income coming in, extra assets on the balance sheets too

[PauloBarnesi]

take back British Rail extra income coming in

Have you any idea how much the Rev costs? And the costs of culling a load of Yankee crap and reopening Swindon...

[Richard]

Don't see how we can take back and renationalise assets which would cost money, when we do not in fact have any money

[bickster]

Don't see how we can take back and renationalise assets which would cost money, when we do not in fact have any money

Why would taking them back cost money? Simply take them back into public ownership, its where they belong anyway and don't compensate the shareholders as they shouldn't have been allowed to get the shares on the cheap by the Witch in the first place, the selling off of the Utilities and the railways was a terrible terrible error by the Witch, whoda think it it, the Witch selling off the national assets on the cheap, bit like selling the gold and telling everyone you were going to do it. Same horse different jockey

And Paul, we need to rebuild Vulcan whilst we're at it

EDIT: But if assets were to be sold I take it we're talking the banks we all own? in that case I'm totally in favour of that as long as the nation makes a profit and it goes a good way to paying the debt they created off

[PauloBarnesi]

[

And Paul, we need to rebuild Vulcan whilst we're at it

you and your bleemin 37s and 50s....

[bickster]

absolutely

[LondonLax]

Don't see how we can take back and renationalise assets which would cost money, when we do not in fact have any money

Why would taking them back cost money? Simply take them back into public ownership, its where they belong anyway and don't compensate the shareholders as they shouldn't have been allowed to get the shares on the cheap by the Witch in the first place, the selling off of the Utilities and the railways was a terrible terrible error by the Witch, whoda think it it, the Witch selling off the national assets on the cheap, bit like selling the gold and telling everyone you were going to do it. Same horse different jockey

Have you been stealing ideas from Robert Mugabe?

[bickster]

Don't see how we can take back and renationalise assets which would cost money, when we do not in fact have any money

Why would taking them back cost money? Simply take them back into public ownership, its where they belong anyway and don't compensate the shareholders as they shouldn't have been allowed to get the shares on the cheap by the Witch in the first place, the selling off of the Utilities and the railways was a terrible terrible error by the Witch, whoda think it it, the Witch selling off the national assets on the cheap, bit like selling the gold and telling everyone you were going to do it. Same horse different jockey

Have you been stealing ideas from Robert Mugabe?

What nationalised utility and railway companies? I think you'll find that one rather fashionable the world over, most countries view these essential services as infrastructure, essential to the fabric of the country, selling them off in the first place was the mistake